-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DtQDEPLEqgmNlzhEIGfI0PLKzSrx/n25WpA91mxkQxt8uwipJukDSrcjzqJ0QMKn 1Qr3OSkrFVAFRp0s1Pak2A== 0000950137-99-004151.txt : 19991117 0000950137-99-004151.hdr.sgml : 19991117 ACCESSION NUMBER: 0000950137-99-004151 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BUTLER MANUFACTURING CO CENTRAL INDEX KEY: 0000015840 STANDARD INDUSTRIAL CLASSIFICATION: PREFABRICATED METAL BUILDINGS & COMPONENTS [3448] IRS NUMBER: 440188420 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12335 FILM NUMBER: 99753480 BUSINESS ADDRESS: STREET 1: BMA TOWER PENN VALLEY PARK STREET 2: P O BOX 419917 CITY: KANSAS CITY STATE: MO ZIP: 64141 BUSINESS PHONE: 8169683000 MAIL ADDRESS: STREET 1: BMA TOWER PENN VALLEY MALL STREET 2: P O BOX 419917 CITY: KANSAS CITY STATE: MO ZIP: 64141 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File No. 001-12335 FOR THE QUARTER ENDED SEPTEMBER 30, 1999 BUTLER MANUFACTURING COMPANY Incorporated in the State of Delaware BMA Tower - Penn Valley Park Post Office Box 419917 Kansas City, Missouri 64141-0917 Phone: (816) 968-3000 I.R.S. Employer Identification Number: 44-0188420 Shares of common stock outstanding at SEPTEMBER 30, 1999: 7,035,702 The name, address and fiscal year of the Registrant have not changed since the last report. The Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. 2 INDEX
PART I. - FINANCIAL INFORMATION Page Number ----------- ITEM 1. Financial Statements (1) Consolidated Financial Statements (unaudited): Consolidated Statements of Operations for the Three and Nine Month Periods Ended September 30, 1999 and 1998. 3 Consolidated Statements of Comprehensive Income for the Nine Month Periods Ended September 30, 1999 and 1998. 4 Consolidated Balance Sheets as of September 30, 1999 and December 31, 1998. 5 Consolidated Statements of Cash Flows for the Nine Month Periods Ended September 30, 1999 and 1998. 6 (2) Notes to Consolidated Financial Statements 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 ITEM 3. Quantitative and Qualitative Disclosure About Market Risk. 12 PART II. - OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K 13 Signatures 14 Exhibits Index 15
Page 2 3 BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the three and nine month periods ended September 30, 1999 and 1998 (unaudited) ($000's omitted except for per share data)
Three months ended Nine months ended September 30, September 30, ------------------------------ ------------------------------ 1999 1998 1999 1998 --------- --------- --------- --------- Net sales $ 266,382 $ 268,054 $ 718,491 $ 700,355 Cost of sales 219,704 222,809 593,431 582,121 --------- --------- --------- --------- Gross profit 46,678 45,245 125,060 118,234 Selling, general and administrative expenses 33,085 32,007 95,598 91,611 Restructuring charge (credit) (447) - 1,067 - --------- --------- --------- --------- Operating income 14,040 13,238 28,395 26,623 Other income (expense), net (53) (245) (286) 406 --------- --------- --------- --------- Earnings before interest and taxes 13,987 12,993 28,109 27,029 Interest expense 1,439 1,420 4,314 4,288 --------- --------- --------- --------- Pretax earnings 12,548 11,573 23,795 22,741 Income tax expense (benefit) (1,822) 4,840 2,830 9,931 --------- --------- --------- --------- Net earnings $ 14,370 $ 6,733 $ 20,965 $ 12,810 ========= ========= ========= ========= Basic earnings per common share $ 2.04 $ 0.89 $ 2.95 $ 1.68 ========= ========= ========= ========= Diluted earnings per common share $ 2.03 $ 0.88 $ 2.92 $ 1.67 ========= ========= ========= ========= Basic weighted average number of shares 7,032,296 7,564,700 7,116,872 7,627,038 Diluted weighted average number of shares 7,094,772 7,618,435 7,174,952 7,691,510
See Accompanying Notes to Consolidated Financial Statements. Page 3 4 BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the nine month periods ended September 30, 1999 and 1998 (unaudited) ($000's omitted, except for per share data)
Nine months ended September 30, 1999 1998 -------- -------- Net earnings $20,965 $12,810 Other comprehensive income: Foreign currency translation adjustment (937) (398) ------- ------- Comprehensive income $20,028 $12,412 ======= =======
See Accompanying Notes to Consolidated Financial Statements. Page 4 5 BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 1999 and December 31, 1998 (unaudited) ($000's omitted)
1999 1998 ------------ ------------- ASSETS Current assets: Cash and cash equivalents $ 42,056 $ 10,260 Receivables, net 145,226 130,622 Inventories: Raw materials 22,075 34,509 Work in process 12,885 8,503 Finished goods 33,462 37,417 Lifo reserve (10,711) (10,177) ------------ ------------ Total inventory 57,711 70,252 Real estate developments in progress 26,444 19,139 Deferred tax assets 16,755 10,944 Other current assets 10,444 12,283 ------------ ------------ Total current assets 298,636 253,500 Investments and other assets 42,433 38,689 Assets held for sale 4,000 4,000 Property, plant and equipment, at cost 235,143 243,671 Less accumulated depreciation (143,459) (145,967) ------------ ------------ Net property, plant and equipment 91,684 97,704 ------------ ------------ $ 436,753 $ 393,893 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable $ 3,058 $ 1,627 Current maturities of long-term debt 5,701 5,832 Accounts payable 101,080 83,710 Dividends payable 1,126 1,092 Accrued liabilities 75,695 62,444 Taxes on income 8,054 6,425 ------------ ------------ Total current liabilities 194,714 161,130 Deferred tax liabilities 3,441 3,441 Other noncurrent liabilities 15,980 16,233 Long-term debt, less current maturities 62,057 62,901 Shareholders' equity: Common stock, no par value, authorized 20,000,000 shares, issued 9,088,200 shares, at stated value 12,623 12,623 Cumulative foreign currency translation adjustment (989) (52) Retained earnings 196,162 178,536 ------------ ------------ 207,796 191,107 Less cost of common stock in treasury, 2,052,498 shares in 1999 and 1,806,202 shares in 1998 47,235 40,919 ------------ ------------ Total shareholders' equity 160,561 150,188 ------------ ------------ $ 436,753 $ 393,893 ============ ============
See Accompanying Notes to Consolidated Financial Statements. Page 5 6 BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the nine month periods ended September 30, 1999 and 1998 (unaudited) ($000's omitted)
1999 1998 -------- -------- Cash flows from operating activities: Net earnings $ 20,965 $ 12,810 Adjustments to reconcile net earnings to net cash used in operating activities: Depreciation and amortization 11,617 11,012 Restructuring Charge, net 1,067 -- Equity earnings on joint ventures (99) (156) Change in asset and liabilities, net of businesses acquired and sold: Receivables (14,604) (28,214) Inventories 12,681 3,234 Real estate developments in progress (7,305) 748 Other current assets (3,972) 638 Current liabilities excluding short-term debt 32,545 32,591 -------- -------- Net cash provided by operating activities 52,895 32,663 Cash flows from investing activities: Capital expenditures (6,414) (10,301) Other, net (2,777) (6,512) -------- -------- Net cash used in investing activities (9,191) (16,813) Cash flows from financing activities: Payment of dividends (3,218) (3,214) Proceeds from issuance of long-term debt -- 35,000 Repayment of long-term debt (851) (821) Net increase (decrease) in short-term debt 1,300 (19,766) Sale and issuance of treasury stock 457 781 Purchase of treasury stock (6,773) (6,121) Other, net (1,886) (64) -------- -------- Net cash (used) provided by financing activities (10,971) 5,795 Effect of exchange rate changes on cash (937) (398) -------- -------- Net increase in cash and cash equivalents 31,796 21,247 Cash and cash equivalents at beginning of year 10,260 5,515 -------- -------- Cash and cash equivalents at September 30 $ 42,056 $ 26,762 ======== ========
See Accompanying Notes to Consolidated Financial Statements. Page 6 7 BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the accounting policies described in the consolidated financial statements and related notes included in Butler Manufacturing Company's 1998 Form 10-K. It is suggested that those consolidated statements be read in conjunction with this report. The year-end financial statements presented were derived from the company's audited financial statements. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments necessary for a fair presentation of the financial position of Butler Manufacturing Company and the results of its operations. NOTE 2 - NEW ACCOUNTING PRONOUNCEMENT Derivative Instruments and Hedging Activities The Financial Accounting Standards Board (FASB) issued Statement Nos. 133 and 137, "Accounting for Derivative Instruments and Hedging Activities" effective for fiscal years beginning after June 15, 2000. These new statements replace existing pronouncements and practices with an integrated accounting and reporting standard for derivatives and hedging activities. They require every derivative instrument be recorded in the balance sheet as either an asset or liability at its fair value, and changes in a derivative's fair value be recognized in current earnings or other comprehensive income. NOTE 3 - BUSINESS SEGMENTS The company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information", which changed the way the company reports information about its operating segments. The company groups its operations into four business segments: Building Systems, Architectural Products, Construction Services, and Real Estate. The Building Systems segment includes the U.S. and foreign building systems businesses and the company's international joint venture operations. These business units supply steel and wood frame pre-engineered building systems for a wide variety of commercial, community, industrial, and agricultural applications. Also included in the Building Systems segment are all restructuring charges, previously included in Other. The Architectural Products segment includes the operations of the Vistawall Group. The group's businesses design, manufacture, and market architecturally oriented component systems for nonresidential construction, including aluminum curtain wall, storefront systems, windows, doors, skylights, and roof accessories. The Construction Services segment provides comprehensive design and construction planning, execution, and management services for major purchasers of construction. Projects are usually executed in conjunction with the dealer representatives of other Butler divisions. The Real Estate segment provides real estate build-to-suit-to-lease development services in cooperation with Butler dealers. The accounting policies for the segments are the same as those described in the summary of significant accounting policies as included in the company's 1998 form 10-K. Butler Manufacturing Company's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and expertise. Other represents unallocated corporate expenses and unallocated assets, including corporate offices, deferred taxes, pension accounts, and intersegment eliminations. Page 7 8
Three Months Nine Months NET SALES Ended September 30, Ended September 30, (Thousands of dollars) 1999 1999 1999 1998 - -------------------------------------------------------------------------------------------------------------- Building Systems $ 177,374 $ 184,930 $ 465,822 $ 469,109 Architectural Products 50,830 48,560 149,459 133,417 Construction Services 49,963 42,219 115,662 99,997 Real Estate 0 0 12,630 18,155 Other (11,785) (7,655) (25,082) (20,323) -------------------------------------------------------------- $ 266,382 $ 268,054 $ 718,491 $ 700,355 ==============================================================
Net sales represent revenues from sales to affiliated and unaffiliated customers before elimination of intersegment sales which is included in other. Intersegment eliminations are primarily sales from the Building Systems and Architectural Products segments to Construction Services.
Three Months Nine Months PRETAX EARNINGS (LOSSES) Ended September 30, Ended September 30, (Thousands of dollars) 1999 1998 1999 1998 - -------------------------------------------------------------------------------------------------------------- Building Systems $ 10,141 $ 11,149 $ 16,941 $ 21,453 Architectural Products 5,356 3,470 14,892 8,481 Construction Services 1,377 771 2,504 1,732 Real Estate 239 178 2,096 2,113 Other (4,565) (3,995) (12,638) (11,038) -------------------------------------------------------------- $ 12,548 $ 11,573 $ 23,795 $ 22,741 ==============================================================
TOTAL ASSETS September 30, December 31, (Thousands of dollars) 1999 1998 - ----------------------------------------------------------------------------------------------------------------- Building Systems $ 225,228 $ 227,474 Architectural Products 81,056 80,799 Construction Services 40,611 26,596 Real Estate 30,284 26,303 Other 59,574 32,721 -------------------------------- $ 436,753 $ 393,893 ================================
Assets represent both tangible and intangible assets used by the segments. Other assets represent cash and cash equivalents, assets held for sale, corporate equipment, and miscellaneous other assets which are not related to a specific business segment. NOTE 4 - RESTRUCTURING AND ASSET IMPAIRMENT CHARGES In December 1998, the company's Board of Directors approved a restructuring of the South American and European metal buildings businesses. As a result, the company recorded a $7.1 million pretax charge in connection with the restructuring. In addition, the company recorded a $6.5 million pretax charge for the impairment of certain assets. The actions leading to the restructuring charge were the closing of manufacturing operations in Brazil and the move of European manufacturing operations to Hungary from Scotland. Estimates of realizable sales values were obtained from outside appraisal and the company's experience in selling redundant assets. Page 8 9 The remaining $1 million restructuring accrual at the end of the third quarter pertains to severance and termination costs ($.3 million), and legal, claims, and other incremental shut-down costs ($.7 million) associated with restructuring the Brazilian and European metal buildings operations. The company utilized $1.0 million of the 1998 restructuring accrual through the end of the third quarter of 1999 with $.1 million utilized in the first quarter, and $.6 million in the second quarter and $.3 million third quarters of 1999.
Details of the 1998 Restructuring Accrual 12/31/1998 Less: 09/30/99 Accrual Utilization Recoveries Accrual --------------------------------------------------------------- Severance and termination costs $1,185 $867 $ --- $318 Legal, claims, and other costs 1,092 121 295 676 --------------------------------------------------------------- $2,277 $988 $295 $994 ===============================================================
During the first quarter of 1999 the company recorded an additional $1.5 million restructuring charge for currency translation losses on its remaining Brazilian net asset exposure. In the third quarter $.4 million of the restructuring charge was taken to income, due to better than expected recovery on redundant and impaired assets. Current year restructuring charges net of recoveries totaled $1.1 million through the third quarter of 1999, and are reflected in the Building Systems segment. NOTE 5 - SALE OF BUSINESS In September 1999 the company sold the shares of its United Kingdom metal buildings business, Butler Building Systems Ltd., to Aerpac Investment Holding UK Ltd. The company recorded a one-time gain of $5.8 million as a carryback of the businesses capital losses. The gain is reflected as a tax benefit in the September 30, 1999 Consolidated Statement of Operations. Page 9 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net sales for the third quarter of $266 million decreased 1% from a year ago primarily due to decreased sales in the Building Systems segment. This decrease was partially offset by recorded sales increases in the Architectural Products and Construction Services segments. For the nine months ended September 30, 1999 net sales were $718 million compared with $700 million for the same period in 1998, an increase of 3%. The Architectural Products and Constructions Services segments recorded increases while sales in the Building Systems segment were comparable with the prior nine month period. Butler Real Estate sales were lower than those of 1998 due to lower project sales. The Architectural Products segment, which consists of the Vistawall group, reported a 12% increase in sales for the first nine months of 1999 compared with same period a year ago, due to a good commercial construction market and excellent customer service, while the Construction Services segment sales for the first nine month period of 1999 increased 16% compared with the prior year. Building Systems segment sales were comparable with the same period a year ago. An increase in internationally-based metal building sales over the prior nine month period more than offset a slight decline in domestic metal building systems sales compared with a year ago. Pretax earnings for the quarter ended September 30, 1999 were $12.5 million compared with $11.6 million for the same period a year ago. The increase is attributable to the Architectural Products segment's strong performance. Pretax earnings for the nine month period ending September 30, 1999 were $23.8 million compared to $22.7 million in the previous year. Increases in the Architectural Products segment more than offset the lower Building Systems segment results and the restructuring charge activity. In the third quarter of 1999 the company realized a one-time gain of $5.8 million reflected as a tax benefit from the sale of Butler Building Systems, Ltd., its United Kingdom metal buildings subsidiary. LIQUIDITY AND CAPITAL RESOURCES Cash and equivalents increased $31.8 million for the first nine months of 1999 due to a decrease in working capital attributed to better working capital management. Principal uses of cash were to fund operations, capital expenditures, the repurchase of company shares for the treasury, and the payment of dividends. For the nine months ended September 30, 1999, domestic short-term borrowings averaged $6 million for 101 days compared to $20 million for 118 days in 1998. In March, 1998 the company completed a $35 million private placement of senior unsecured notes due March 20, 2013. The notes carry a fixed interest rate of 6.57%, and are payable in equal annual installments of $3.5 million beginning in 2004. Proceeds from the private placement were used to pay down the company's short-term line of credit and to fund future investment opportunities. The company continues to maintain domestic bank credit facilities aggregating $40 million to meet the needs of the company. As of June 30, 1999, $1.8 million of the credit line was utilized to provide a bank letter of credit to secure insurance obligations. Management believes the company's operating cash flow, along with the bank credit lines, are sufficient to meet future liquidity requirements. The company's foreign operations maintain separate lines of credit with local banks of approximately $7 million at current exchange rates. Management believes that the bank lines along with parent company loans, if any, are sufficient to meet future liquidity requirements. Capital expenditures were $6.4 million for the first nine months of 1999 compared to $10.3 million for the same period in 1998. Total capital expenditures are expected to be approximately $13 million in 1999 compared with $15 million in 1998, and will be used to increase capacity in the domestic and international metal buildings and architectural products businesses. Through the third quarter of 1999 the company repurchased for the treasury approximately 268,000 shares of company's common stock for $6.8 million and paid dividends of $3.2 million. Total backlog of $343 million increased 8% from comparable backlog of a year ago. Page 10 11 MARKET PRICE RISK The company's principal exposure to market risk is from changes in commodity prices, interest rates, and currency exchange rates. To limit exposure and to manage volatility related to these risks, the company enters into select commodity and currency hedging transactions, as well as forward purchasing arrangements. The company does not use financial instruments for trading purposes. Commodity Price Exposure: The company's primary commodities are steel, aluminum, and wood. Steel is the company's largest purchased commodity. The company enters into forward steel purchase arrangements in its metal buildings business for periods of less than one year's duration to protect against potential price increases. To the extent there are increases in the company's steel costs, they are generally recaptured in the company's product sales prices. Aluminum hedge contracts of less than one year's duration are purchased to hedge the engineered products backlog of the Vistawall group against potential losses caused by increases in aluminum costs. This product line is sensitive to material cost movements due to the longer lead times from project quoting to manufacture. Gains or losses recorded on hedge contracts are offset against the actual aluminum costs incurred. The fair value of aluminum contracts and their associated risk are immaterial. The company's wood frame building business enters into forward purchase arrangements for commercial grade lumber for periods of less than one year's duration. Lumber costs are generally more volatile than steel costs. To offset increases in lumber costs, the company adjusts product prices accordingly. Interest Rates: The majority of the company's long-term debt carries a fixed interest rate, therefore the company's interest expense is relatively stable and not influenced by changes in market interest rates. Foreign Currency Fluctuation: The majority of the company's business is transacted in U.S. dollars, therefore limiting the company's exposure to foreign currency fluctuations. Where the company has foreign-based operations, the local currency has been adopted as the functional currency. As such, the company has both transaction and translation foreign exchange exposure in those operations. Due to relative cost and limited availability, the company does not hedge its foreign net asset exposure. The company does hedge short-term foreign currency transaction exposures related to sales activity in Canada. Forward Canadian dollar sale contracts of up to four months' duration are purchased to cover the exposure. The fair value of such contracts are immaterial. YEAR 2000 STATUS As of the end of the third quarter the company has completed remediation and compliance testing of mission critical business, manufacturing, and engineering systems, and has developed contingency plans in the unlikely event an interruption or failure occurs in any mission critical system. The contingency plans also address year 2000 compliance of the company's critical product and service providers. To date the majority of all critical suppliers have confirmed their year 2000 readiness. For those who have not, contingency plans have been developed and alternative year 2000 compliant product and service providers have been identified and contacted. If critical company suppliers, who have indicated their compliance, incur year 2000 business interruptions that materially impact their ability to provide products and services, their failure to provide products and services could have a material adverse effect on the company's business, results of operations, and financial condition. The company will monitor compliance of suppliers well into the subsequent year. Roll-over plans are in place to monitor and report year 2000 interruptions, or failures of critical systems and suppliers through January, 2000, should they occur. FORWARD LOOKING INFORMATION This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which may include statements concerning projection of revenues, income or loss, capital expenditures, capital structure, or other financial items, statements regarding the plans and objectives of management for future operations, statements of future economic performance, statements of the assumptions underlying or relating to any of the forgoing statements, and other statements which are other than statements of historical fact. These statements appear in a number of places in this report and include statements regarding the intent, belief, or current expectations of the company and its management with respect to (i) the cost and timing of the completion of new or expanded facilities, (ii) the company's competitive position, (iii) the supply and price of materials used by the company, (iv) the demand and price for the company's products and services, or (v) other trends affecting the company's financial condition or results of operations including changes in manufacturing capacity utilization and corporate cash flow in both domestic and international markets. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially as a result of these various factors. For additional comments, refer to the October 15, 1999 letter to shareholders, which is attached as exhibit 19. Page 11 12 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There are no material changes to the disclosure made in the Annual Report on Form 10-K for the year ended December 31, 1998 regarding this matter. See discussion about market risk under Item 2. Management Discussion and Analysis on page 10 of this document. Page 12 13 PART II. - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits (19) October 15, 1999 letter to shareholders (27) Financial Data Schedule (b) Reports on Form 8-K. The company has not filed any reports on Form 8-K during the quarter ended September 30, 1999. Page 13 14 SIGNATURES Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BUTLER MANUFACTURING COMPANY November 12,1999 /s/ Larry C. Miller - ---------------- --------------------------------------- Date Larry C. Miller Vice President - Finance, and Chief Financial Officer November 12, 1999 /s/ John W. Huey - ----------------- --------------------------------------- Date John W. Huey Vice President, General Counsel and Secretary Page 14 15 EXHIBIT INDEX Exhibit Number Description - ------- ----------------------------------------------- 19 October 15, 1999 Letter to Shareholders 27 Financial Data Schedule 15 EX-19 2 OCTOBER 15, 1999 LETTER TO SHAREHOLDERS 1 EXHIBIT 19 Butler Manufacturing Company THIRD QUARTER REPORT 1999 Nine Months Ended September 30, 1999 BMA TOWER PENN VALLEY PARK KANSAS CITY, MO 64108 To Our Shareholders: Third quarter sales were $266 million, nearly the same as last year. Quarterly net earnings were $14.4 million, or $2.03 per share compared with $6.7 million, or $.88 per share a year ago. The 1999 third quarter net earnings includes a one-time gain of $5.8 million, or $.81 per share. The one-time gain was realized from the sale in late September of Butler Building Systems, Ltd., our former United Kingdom metal buildings subsidiary, to a Dutch firm engaged in an unrelated manufacturing business. As previously reported, we established a new metal buildings business in Hungary to serve the continent and United Kingdom markets. Sales for the nine months through September were $718 million, an increase of 3% over the same period last year. Net earnings for the first three quarters were $21 million, or $2.92 per share compared with the $12.8 million, or $1.67 per share earned in 1998 through September. The 1999 results include the one-time gain mentioned previously. Sales in the U. S. metal buildings business were about 4% lower through September and operating earnings, while solidly profitable, were down considerably from the same period last year. F. W. Dodge reports that manufacturing construction awards, which is an important building market for this business, were off 13% through August of this year compared with 1998. We have reduced operating expenses and are aggressively pursuing sales opportunities to help offset the decline in the manufacturing building sector. The international metal building businesses continue to make progress. Our China operation is performing exceptionally well. Through September, sales have more than doubled compared with last year and the operating earnings contribution was substantial as opposed to a loss in 1998. In order to sustain the positive operating performance and capture the significant growth potential we foresee in China, the board of directors approved an investment of $5 million in September to increase production capacity. We expect to complete this expansion by the middle of next year. Europe is beginning to realize the benefits operating from its lower cost base in Hungary. However, sales through September were below the level of last year, reflecting the slower economy in Europe and the interruption of expanding our manufacturing plant. As a result, the current year operating loss in Europe was greater than the loss recorded last year. The Lester wood frame building business continues to trail results from last year. Sales are down 11% and the business operated at a modest loss through September. Our dependence on the very depressed hog confinement building market coupled with the much slower general agricultural economy has eroded Lester operating performance in 1999. We have reduced operating expenses in response to the lower market opportunity and redirected resources to the commercial building market. Our Vistawall Architectural Products group continues its strong performance with sales through September of $149 million, 12% ahead of a year ago. Operating earnings were up 74% compared with 1998, as the commercial construction market remains robust. We are evaluating options to increase our capacity to grow this business and sustain the high service levels that Vistawall customers expect. Butler Construction continued its positive operating trend through September compared with last year. Sales increased 16% to $116 million while operating earnings increased 34%. Butler Real Estate's 1999 performance matched its earnings contribution from 1998. These businesses form the essential components that support our strategy of construction and real estate leasing services for Butler dealers and major corporate customers. 2 We expected to show significant earnings improvement this year compared to 1998 and we have. The diversity of operating earnings, both geographically and by market segment, is a unique strength of Butler Manufacturing Company. In addition to our solid financial results, we achieved a new milestone in outstanding safety performance, a tribute to our training and the dedication to safe work practices of Butler associates throughout the world. At the end of September, total backlog was $343 million, 8% ahead of the comparable backlog of $316 million last year. Product backlog was up 3% and construction backlog up 40%. We anticipate a solid finish to 1999. Cordially yours, /s/John Holland John Holland President and Chief Executive Officer October 15, 1999 Butler Manufacturing Company EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Butler Manufacturing Company Consolidated Statements of Operations for the quarter ended September 30, 1999, and Consolidated Balance Sheet as of September 30, 1999, and is qualified in its entirety by reference to such financial statements. 0000015840 BUTLER MANUFACTURING COMPANY 1,000 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 42,056 0 145,226 0 57,711 298,636 235,143 143,459 436,753 194,714 62,057 12,623 0 0 207,796 436,753 718,491 718,205 593,431 593,431 95,598 0 4,314 23,795 2,830 20,965 0 0 0 20,965 2.95 2.92 Reflects long-term debt, less current maturities Reflects other stockholders' equity before deduction of $47.2 million cost of treasury stock Reflects net sales plus net international joint venture income less net other expense Consists of selling, general and administrative expense
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